- Save Most of Your Raise: Accumulate most of it in a retirement portfolio and remember spending more now will make it painful to cut back later.
- Higher Income Means Higher Taxes: You face higher marginal brackets for both state and federal income taxes resulting in a double or even triple increase from say 15% to 40% just by transitioning from residency to practice.
- Less Tax Deductions: It is important to find ways to capture tax deductions and defer taxes, especially with pretax contributions to a retirement plan with guidance from a financial planner.
- Financial Planning is Key: Higher income requires higher life and disability insurance. Also, asset protection and estate planning are even more important as a result of becoming greater targets for malpractice lawsuits.
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